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IMF lowers Romania's 2018 GDP growth forecast to 4%

IMF lowers Romania's 2018 GDP growth forecast to 4% Author: Stefan Jurca Licence CC BY 2.0

BUCHAREST (Romania), October 9 (SeeNews) - Romania's real gross domestic product (GDP) growth is projected to reach 4.0% in 2018 before decelerating to 3.4% in 2019, the International Monetary Fund (IMF) said in the October edition of its World Economic Outlook (WEO) report released on Tuesday.

In its previous WEO report published in April, the IMF said it expected Romania's economy to expand by a real 5.1% in 2018.

According to the global lender, Romania closed 2017 with a growth rate of 6.9% on fiscal stimulus and strong external demand. Growth is expected to decline in the following two years as the stimulus moderates, it added.

Romania's economic growth slowed to 4.1% year-on-year in the second quarter of 2018, compared to 6.1% annual growth in the like quarter of 2017,  the national statistical office, INS, said. Final household consumption volume rose by 3.9% in the second quarter of the year.

The IMF's October forecast for Romania's 2018 economic growth is below the government's projection of a 5.5% increase.

Romania's consumer prices are seen rising 4.7% year-on-year in 2018 and by 2.7% in 2019, the IMF said in the October edition of its WEO report. The country's annual consumer price inflation accelerated to 5.1% in August from 4.6% in the previous month, INS said. Romania's central bank, BNR, in August decreased its annual inflation forecast for 2018 to 3.5% from 3.6%, back within its target band of 1.5-3.5%.

Unemployment rate is projected to fall from 4.9% in 2018 to 4.7% in 2018 and 4.8% in 2019, according to the IMF forecast.

The country's current account deficit is expected to drop to 3.5% of GDP projected in 2018 and to 3.4% of GDP projected in 2019, the IMF said. This compares with a current account gap of 3.4% of GDP in 2017, according to the IMF. Romania's current account recorded a deficit of 4.811 billion euro ($5.589 billion) in January-July, compared to a deficit of 4.162 billion euro in the year-ago period.

In June, the IMF said that fiscal moderation would reduce the amount of monetary tightening required to help temper overheating of Romania's economy.

($=0.871 euro)